Densmore Blog


How the CFE is Created - Part 3 of 3

On August 1, 2016

In the first two parts of this series, I discussed how the CFE is created and marked. The third component of the Board of Examiners’ (BOE) responsibilities is setting the passing candidate profile and it is the most interesting activity.


Passing profiles are determined by the CFE sub-committee. That profile encompasses all of the evaluation aspects of Day 1 and Days 2/3. Day 1 requires its own passing profile and the 2015 PARs show Day 1 had seven assessment components. Each of those seven components would need a passing standard plus there has to be an overall passing profile as Day 1 is an holistically marked examination.


CFE Days 2/3 has four assessment levels, with ten specific assessment areas within those four levels. A passing profile must encompass the sufficiency requirement of Level 1, the depth requirements for Financial Reporting and Management Accounting at Level 2, the role depth requirements for Level 3, and the six breadth requirements of Level 4 (one for each of the six technical competency areas). Each of the ten assessment areas requires a passing standard.


There is a flowchart in the 2015 CFE Report illustrating what is required from the four levels to pass CFE Days 2/3, but the short version is that the overall passing profile is not met if any of the individual passing standards of the four levels is not met. There is a small twist at Level 2 where you only need depth in one of the two areas (FR or MA), but other than that you get the picture.


Setting this passing profile is a big deal that impacts overall pass rates. Recognize that there is no shortage of information available from the marking process that is used to develop that passing profile. Again, there are a number of steps and lots of discussion involved in getting to that passing profile for an entry-level candidate. That passing profile needs to be defensible when it is presented to the full CFE BOE since it requires full board ratification.


Each examination is unique so the Board considers the following:

-          the competency area requirements described in the Competency Map

-          how tough individual cases were

-          the level of difficulty of individual assessments (especially those considered to be very difficult or very easy)

-          the marking guides and how they were applied during marking

-          specific feedback on marking difficulties from the team leaders and assistant leaders

-          any wording or translation concerns in the cases


A change in a profile component can have a large impact on individual assessment levels and therefore the overall pass rate. For instance, requiring three C ratings versus two C ratings for Level 3 role depth could significantly lower the Level 3 role depth success rate. The trick is to balance those micro-level choices and the big picture assessment of the strength of the group as a whole and where the cutoff line should be for successful candidates.


As you can imagine, this process involves lots of statistical analysis and lots of discussion. This is not a process that is taken lightly as it determines the rigor of the CFE and ultimately the value of your CPA designation.


(Bruce Densmore – August 1, 2016)

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